Asia-Pacific Eyes Photonics Market Growth

Photonics SpectraMar 2017The ongoing development of manufacturing and telecommunications technologies, among others, is thrusting the industry to the top of the global goods market. Asia-Pacific, in particular, is expected to grow quickly and steadily.

The global photonics market will continue its fervent growth in the coming years, according to a number of reports, as technology advances industrywide. Progressing the most is the telecommunications sector, which is expected to become the largest end-use industry for photonics because of rising demand for fiber optics components and systems. The manufacturing sector is booming, too, as lasers and other photonics-related technologies are replacing traditional machines and tools.

While this growth is occuring around the world, the Asia-Pacific (APAC) region is expected to see the fastest expansion.

Lasers grow in manufacturing sector

Parallel to widespread technological evolution, the photonics market is demonstrating robust growth in manufacturing, telecommunications and consumer electronics, and specifically in the APAC region.

Several market research companies attribute this robust development, in part, to advances in and demand for technologies in the manufacturing sector. Laser components and systems increasingly are finding manufacturing applications, according to the market research firm Reportlinker, with demand from APAC contributing to global market growth. Specifically, laser technology has begun replacing traditional machine tools in manufacturing applications, as low-cost fiber lasers and industrial pulse lasers are being developed.

The projected expansion in the next several years of telecommunications into the largest end-use sector of the photonics industry can be attributed to a rising demand for optical fibers. Optical fibers are quickly becoming more popular than traditional metallic wires, as they demonstrate greater safety and security, and telecommunications and information technology is prompting new developments in regions such as China and India.

The 3D imaging market’s anticipated boom in the Asia-Pacific region comes from continuing advances of this technology and from demand for security and defense applications such as facial identification, and weapons and explosives detection. Health care applications are also a top user of 3D imaging technology. Compared to traditional imaging methods, 3D imaging is “faster and easier to read,” according to Massachusetts General Hospital. Mass General said that this technique is able to extract data from exams to create “precise anatomical visualizations with added benefits for radiologists, referring physicians and patients.” It also can reduce costs for the health care system.

Growing investment in R&D across APAC is helping to drive the microscopy devices market, as is the growth of universities and research institutions there. An increased focus on nanotechnology research has become a driving factor in this market segment, and growth of the electronic and renewable energy industries has boosted the demand for microscopy devices in semiconductor applications. The high resolution capacity of such devices is leading R&D advances in cell biology and neurology. The increasing use of electron and scanning probe microscopes is further propelling the microscopy devices market segment.

3D imaging market gains traction

Within a five-year span (2016-2021), the global photonics market should witness a nearly 10 percent compound annual growth rate (CAGR). By 2021, a late-2016 report by Research and Markets notes this market is expected to reach $724 billion (USD). Propagating the fastest will be the Asia-Pacific region. The report also projects that China will be the largest market for photonics in the region into the near future. The market in India is surging, as well, putting it in a prime position to exhibit the fastest growth among APAC nations.

Over the next three years the global 3D imaging market is expected to reach $16.6 billion, growing by more than 27 percent annually, according to Markets-andMarkets, with Asia-Pacific expected to experience an increase in market traction. Allied Market Research anticipates significant growth, as well, in the 3D imaging sector, predicting this segment to hit $21.3 billion by 2022, and APAC countries offering significant opportunities.
APAC is also expected to be a powerhouse player in the microscopy devices market, encompassing optical, electron and scanning probe microscopes; this market is projected to top $9.7 billion by 2020. The region held the largest share of this market in 2013 (nearly 50 percent), according to Transparency Market Research. Market analysts expect this trend to continue, namely in China, which is expected to dominate the APAC region within this segment of the market through 2020.

Photonic sensors is another fast upward market segment globally. The global market is expected to reach $18 billion by 2021, noted a report by Allied Market Research. The sensor market in APAC has an anticipated annual growth of nearly 23 percent, according to KBV Research. KBV also said that within APAC, China dominated this growth in 2015, while this segment in Japan is expected to reach $1.1 billion by 2022. However, it is India that will see the most significant advances through 2022, growing annually by about 25 percent.

Fiber optic sensors specifically dominated the sensors segment in APAC throughout 2015, and should continue its upward momentum over the next several years at a yearly growth rate of about 21 percent.

The market for photonic integrated circuits (PICs) is swiftly emerging as a major industry sector. The groundbreaking technology is revolutionizing optical networks worldwide. Globally, Markets-andMarkets expects this segment to reach $1.5 billion within the next five years. And while North America held the reins for the PIC segment in 2015, APAC has emerged as a strong region with quick market growth anticipated by Stratistics Market Research Consulting. According to MarketsandMarkets, APAC should become the PIC market leader by 2022, growing annually by 26 percent.

The IR detector market is another in which APAC should see fast, significant growth over the next five years. Allied Market Research found that China, in particular, has the biggest market for IR detector manufacturers and consumers. Overall, the market in APAC is being fed by security concerns, manufacturing industry activities and increased expenditures in emerging markets such as Japan and India.

From bio and medical applications to defense and security, the photonics market in all fields is surging, as the Asia-Pacific region becomes the “largest and fastest growing market for photonics,” according to market experts. And there are no signs it will slow down anytime soon.

APAC Market Flourishing in the Wake of Global Uncertainty

Industry experts focus on several key factors to explain growth in the region.

As part of our look at the Asia-Pacific photonics market, Photonics Spectra spoke with photonics industry experts — Wenko Sueptitz, head of the photonics division for Spectaris (a German high-tech industry association), and Mike Bähren, head of the association’s market research division — about the current trade market, as well as what the future holds. PS also spoke with Herman Chui, senior director of product marketing at Spectra-Physics, for his insight on the APAC market and what the industry can expect for the years ahead.

Q: Which APAC regions and market sectors have seen the most growth in the photonics market in recent years? To what can this market growth in APAC countries be attributed?

Chui: Korea and especially China have experienced the most growth in photonics and lasers in recent years. This again is tied to the major shift in manufacturing to this region and especially these countries; consumer electronics, automotive and industrial manufacturing have been in particular among the faster-growing market sectors.

The photonics and lasers market growth in APAC is due primarily to three factors: faster economic growth in APAC than other regions of world, shift in manufacturing to APAC, and an increasing usage of lasers for manufacturing.

Bähren: East Asia has become the center of the global photonics industry. Very strong are China, Korea, Taiwan and Japan. The growth rates differ — China and Korea are further gaining market share. In Japan and Taiwan, the revenues are more flat or even declining.

One of the reasons for this dynamic is the strong governmental support of the photonics industry in China and Korea. In Korea, the photonics industry gets the highest governmental support, followed by China. Europe is lagging behind, despite Horzion2020 and other national initiatives. In Taiwan and Japan, we see a strong influence of price decline of the flat-panel displays. Additionally, in Japan [we see] the declining demand for photo cameras due to the omnipresence of smartphones.

Overall, the Asian countries are very strong in the communication-related photonic applications like displays, optical communication and information, but also in solid-state lighting. One major reason is the cost-efficiency and the fast ramp-up toward the mass production of new optoelectronic goods in these countries.

Q: What is the state of manufacturing in Europe in regard to the loss of manufacturing to companies in APAC? In your experience, what trends are you seeing globally in trade that relate to this concern?

Bähren: [We are seeing] the companies in the Asia-Pacific region expand their global market position; [we are seeing advances] in research-intensive areas and application fields, which requires a close cooperation or development partnership between the photonics manufacturer and the industry customer [and that] still offer good opportunities for European companies. Currently there are around 5000 European companies (mainly SMEs) with around 370,000 employees active in the photonics sectors. There are high market shares between 30 and 55 percent of European companies, especially in the fields production technology, optical components and systems, measurement and automated vision, medical technology, and life science.

Europe, and Germany in particular, continues to be very strong in manufacturing of complex high-end laser, med-tec, machine vision and sensor solutions. One of the main reasons of this strength is the high density of young, as well as experienced, engineers and skilled workers, a close network of companies in photonics, electronics and precision engineering, and major application markets like automobile, medtec, manufacturing equipment nearby.

Q: What are your thoughts on the current state of global trade relations? Are there changes anticipated for the future?

Sueptitz: Optical solutions for autonomous traffic is something to watch growing rapidly over the next few years. Overall, the global photonics industry is doing very well. The outlook for 2017 is as similarly sunny as it was for 2016. Despite political changes in the U.S. and possibly also in Europe over the year, we do not see a significant influence on the forecast of the photonics industry … yet.

Q: Which sectors of the photonics market are expected to see the most growth in APAC in the next five to 10 years?

Chui: APAC has become the manufacturing center for the world. Everything from consumer electronics to automobiles to solar cells has seen a dramatic shift in manufacturing output to APAC over the past years, and this trend is expected to continue as APAC economies rise and the consumer demand for manufactured goods accelerates in APAC. Photonics and lasers are increasingly becoming a critical part of manufacturing processes as the cost per throughput improves and quality requirements tighten. As a result, we expect photonics and lasers for manufacturing to see the most growth in APAC over the next five to 10 years. We are also seeing growing demand in other areas, such as research, and life and health sciences, where APAC economies are growing faster than other regions of the world. For example, if we assume research funding remains a constant percentage of [gross domestic product], we would expect some continuing slow growth in this area.